Citation Nr: 21024011 Decision Date: 04/21/21 Archive Date: 04/21/21 DOCKET NO. 20-08 316A DATE: April 21, 2021 ORDER An overpayment of Department of Veterans Affairs (VA) compensation benefits was properly created from March 11, 2009 through May 18, 2014, the appeal as to that period is denied. An overpayment of VA compensation benefits was not properly created from May 19, 2014 through March 1, 2015, the appeal as to that period is granted. REMANDED Entitlement to a waiver of recovery of overpayment of VA compensation benefits in the adjusted amount is remanded. FINDINGS OF FACT 1. The Veteran was in receipt of disability compensation benefits when he received active duty from March 11, 2009 through May 18, 2014. 2. The debt created from May 19, 2014 through March 1, 2015 was due to sole VA error. CONCLUSIONS OF LAW 1. The withholding of the Veteran’s VA compensation benefits from March 11, 2009 through May 18, 2014 was proper. 38 U.S.C. § 5304; 38 C.F.R. §§ 3.654, 3.700. 2. The withholding of the Veteran’s VA compensation benefits from May 19, 2014 through March 1, 2015 was not proper. 38 U.S.C. § 5304; 38 C.F.R. §§ 3.654, 3.700. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran served on active duty from December 2003 to March 2005 and October 2005 to March 2015. In August 2020, the Board remanded the claim for further development. In March 2020, the Veteran representative waived the rights to provide an Informal Hearing Presentation (IHP) or supplemental argument. Thus, the Board may proceed to adjudicating the claims. Validity An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. 38 U.S.C. § 5302; 38 C.F.R. § 1.962. When the validity of a debt is challenged, a threshold determination must be made on that question prior to a decision on waiver of indebtedness. Schaper v. Derwinski, 1 Vet. App. 430, 431 (1991); see also 38 C.F.R. § 1.911(c); VAOPGCPREC 6-98 (Apr. 24, 1998). To establish improper creation of an overpayment, i.e. an invalid debt, evidence must show that the claimant was legally entitled to the VA compensation benefits at issue, or, if he was not legally entitled to these benefits, then it must be shown that VA was solely at fault for the erroneous payment of excess benefits. As relevant to this appeal, 38 U.S.C. § 5304(c) prohibits the receipt of VA disability compensation benefits for any period for which the person receives active service pay. See 38 C.F.R. §§ 3.654, 3.700. This includes active duty pay, drill, and active duty for training and inactive duty training payments made to Reservists and members of the National Guard. Id. Reservists may waive their pension, compensation, or retirement pay for periods of field training, instruction, other duty, or drills. A waiver may include prospective periods and contain a right of recoupment for the days for which the reservist did not receive payment for duty by reason of failure to report for duty. 38 C.F.R. § 3.700(a)(1)(iii). An administrative error resulting in an overpayment will not be classified as a VA administrative error or error in judgment if the error is “based on an act of commission or omission by the beneficiary, or with the beneficiary’s knowledge.” Dent, 27 Vet. App. at 380 (citing 38 U.S.C. § 5112(b)(9); see 38 C.F.R. § 3.500(b)(1); VAOPGCPREC 2-90 (March 20, 1990)). Sole administrative error connotes that the claimant neither had knowledge of nor should have been aware of the erroneous award. Further, neither the claimant’s actions nor his or her failure to act must have contributed to payment pursuant to the erroneous award. 38 U.S.C. § 5112(b)(9), (10); 38 C.F.R. § 3.500(b)(2); Jordan v. Brown, 10 Vet. App. 171 (1997) (sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous). Thus, a finding of sole administrative error requires not only error on the part of VA, but that the beneficiary is unaware that the payments are erroneous. Analysis The Veteran challenges the validity of an overpayment created when he received VA compensation concurrently with active duty pay from March 11, 2009 through March 1, 2015. In October 2011, the Veteran submitted an application for compensation benefit. He indicated that he was a member of the Reserves or National Guard in active status. During his July 2013 VA examination, the Veteran stated that he had been with the Army National Guard for the past 10 years. He also stated that from 2000 to 2003, he was a full-time student at the flight school and was activated for deployment from December 2003 to April 2005 and from April 2008 to April 2009. He had been unable to fly from September 2011. In September 2013, the Veteran was awarded VA compensation benefits effective October 27, 2011. In both September and November 2013, the Veteran was provided with VA Form 21-8764 which informed him that receipt of active duty or drill pay as a reservist or member of the Federally recognized National Guard could affect his rights to compensation payments. He was instructed to promptly inform VA if this occurred. On May 19, 2014, the Veteran submitted a Statement in Support of Claim. He informed VA of his active duty status. He requested VA cancel his compensation benefits. In July 2018, VA informed the Veteran that it learned that he had returned to active duty from March 11, 2009 through March 1, 2015. Based on this information, VA propose to terminate his VA benefits from March 11, 2009 through March 1, 2015. In October 2018, the Debt Management Center assessed a debt of $33,120.09. In his September and November 2018 Correspondence, the Veteran disagreed with the termination. He stated that due to breathing problems, he was removed from flight status and was instructed to file a claim for compensation benefits. He further stated that he was transparent about his duty status, and he also submitted a statement requesting VA cancel his benefit payments. However, VA did not act on this information in a timely manner. The Veteran requested a waiver. Based on the evidence of record, the Board finds that the creation of the debt from March 11, 2009 through May 18, 2014 is valid. In this case, the Veteran’s debt was created when he received monetary benefits, i.e., VA compensation benefits concurrently with active duty pay, to which he was not legally entitled. The law prohibits the receipt of VA disability compensation benefits for any period for which the person receives active service pay. See 38 C.F.R. §§ 3.654, 3.700. Additionally, the overpayment was not solely due to VA administrative error. Sole administrative error entails no knowledge or fault on the part of the debtor. See Jordan, 10 Vet. App. 171. In September 2013, VA awarded the Veteran compensation benefits and provided the Veteran with VA Form 21-8764. The form noted that receipt of active duty or drill pay as a reservist could affect his rights to compensation payments. The Board notes that on his October 2011 application for benefits, the Veteran indicated that he was a member of the Reserves or National Guard in active status, and during his July 2013 VA examination, it was noted that he was activated from December 2003 to April 2005 and from April 2008 to April 2009, but was unable to fly from September 2011. The Board notes although the Veteran noted that he was in active duty status on his 2011 application, his application for benefits was not granted until 2013, two years after his initial application. Additionally, during his 2013 VA examination, it was noted that the Veteran was last activated in April 2009. Therefore, the Board finds that VA would not have been aware that, at the time of the grant of service connection, the Veteran was on active duty status. Additionally, as noted above, in September and November 2013, VA mailed the Veteran VA form 21-8764. However, he did not inform VA that he was in active duty status. Therefore, the Board finds that the Veteran knew or should have known that he was not legally entitled to receive compensation benefits concurrently with active duty pay, and he was aware or should have been aware that the payments he received were erroneous because they were based on him not receiving active duty or drill pay as a reservist. As such, the Board finds that from March 11, 2009 through May 18, 2014, the Veteran’s debt was not solely due to VA administrative error. 38 U.S.C. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2). As such, the Board finds that from March 11, 2009 through May 18, 2014, the Veteran’s debt was not solely due to VA administrative error. 38 U.S.C. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2). Accordingly, from March 11, 2009 through May 18, 2014, the reduction in VA disability compensation benefits to offset the concurrent receipt of active service drill pay was proper, and the debt is valid. The application of the law to the facts in this case is dispositive. Where there is no entitlement under the law to the benefit sought, the appeal must be denied. See Sabonis v. Brown, 6 Vet. App. 426 (1994). However, the Board notes that on May 19, 2014, the Veteran submitted a Statement in Support of Claim. The Veteran informed VA of his active duty status. He requested VA cancel his VA compensation benefits. The Board notes that VA’s delay in administratively processing the adjustment to the rate of compensation is not considered administrative error. See Dent at 374. However, in July 2018, over four years after the Veteran informed VA of his active duty status, VA terminated his award. The Board finds had VA acted in a reasonable time, the debt would have been reduced. The Board also notes that neither the Veteran’s actions nor his failure to act contributed to payment pursuant to the erroneous award, and there is no evidence of fraud, misrepresentation, or bad faith. Therefore, after affording the Veteran the benefit of the doubt, the Board finds that the reduction of the Veteran’s compensation benefits from May 19, 2014 through March 1, 2015 is invalid. 38 U.S.C. §§ 5112(b)(10); 38 C.F.R. § 21.9635(r). REASONS FOR REMAND As noted above, VA determined that the Veteran’s total overpayment debt was $33,120.09. Since the Board has determined that the debt created from May 19, 2014 is not valid, the amount of the overpayment should be recalculated and reconsidered. The matter is REMANDED for the following action: 1. Recalculate the amount of the debt owed prior to May 19, 2014. The Veteran must be informed of the amount of any debt he owes, and how the debt was calculated. 2. Thereafter, readjudicate the issue on appeal. If the benefit sought on appeal remains denied, furnish the Veteran and his representative a Supplemental Statement of the Case and afford them the opportunity to respond before the file is returned to the Board for further consideration. MICHAEL LANE Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board T. Moore The Board’s decision in this case is binding only with respect to the instant matter decided. This decision is not precedential and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.